REGULATORY TAKINGS: PAST, PRESENT, AND FUTURE

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REGULATORY TAKINGSPAST, PRESENT, AND FUTURE
2002 Minnesota Association of City
AttorneysEducational Conference and Annual
Meeting

• Timothy J. Dowling
• Chief Counsel
• Community Rights Counsel

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Community Rights Counsel

• Nonprofit public interest law firm
• Assists towns and other local governments in
  defending land use controls and other community
  protections
• Emphasis on takings cases
• Close working relationship with the International
  Municipal Lawyers Association

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Community Rights Counsel Cases

• Mamaroneck, NY open space protections
• Lake Tahoe planning moratoria
• Washington, DC historic preservation laws
• Anchorage, AK fair housing laws
• San Francisco Tenant Protections
• Riverside, CA fire safety protections
• Pennsylvania Ohio bans on harmful coal mining
• Rhode Island wetland protections
• Las Vegas Airport Safety Protections

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TAKINGS LITIGATION HANDBOOK Defending Takings
Challenges to Land Use Regulations
To order the Takings Litigation Handbook, contact
American Legal Publishing at 1-800-445-5588 or
www.amlegal.com.
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Takings Litigation Handbook Defending Takings
Challenges to Land Use Regulations

• The first ever soup to nuts Handbook for
  defending land use regulations from takings
  challenges.
• Explains the procedural and substantive
  defenses that should enable the local
  government to prevail in takings cases.
• Offers advice for the development of a proper
  record, obtaining insurance coverage and
  filing preliminary motions.

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Bad News for Local Governments

• Many takings lawsuits
• Expensive and time-consuming to defend
• Many landowner victories in the U.S. Supreme Court

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Good News for Local Governments

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• Local governments win the vast majority of
  takings cases
• Landowner wins in U.S. Supreme Court are narrow
• Very strong arguments against an expansive
  interpretation of the Takings Clause

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Todays Topics

• Five Themes for Litigating Takings Cases
• Three Categories of Takings Claims
• Ten Cutting-Edge Issues
• RLUIPA
• Palazzolo v. Rhode Island
• Tahoe Moratorium Case

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Five Themes for Litigating Regulatory
Takings Cases

• 1. Narrow Text and Original Meaning
• 2. Judicial Respect for our Federal System
• 3. Judicial Deference to the Policymaking
  Branches
• 4. Avoiding Unduly Harsh Fiscal Impacts
• 5. The Government as Guardian of Property
  Rights and Property Values

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THE TAKINGS CLAUSE
Nor shall private property be taken for public
use, without just compensation. Minnesota
Rule for Govt Enterprise Function McShane v.
City of Faribault, 292 N.W.2d 253 (Minn. 1980)
(airport zoning taking based on substantial and
measurable decline in market value)
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Three Categories ofInverse Condemnation Claims

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• 1. Physical Occupation Cases
• 2. Pure Regulatory Takings Cases
• 3. Dedications and Exactions

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Loretto v. Teleprompter Manhattan CATV Corp.
(1981)
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Loretto v. Teleprompter Manhattan CATV Corp., 458
U.S. 419 (1982)

• A government-compelled permanent physical
  occupation of private property is a per se taking
• Per se rule is very narrow
• A continuous right of access is permanent, even
  if the actual invasion is intermittent

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Lucas v. South Carolina Coastal Council (1992)
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Lucas v. South Carolina Coastal Council, 505
U.S. 1003 (1992)

• Regulation that denies all economically viable
  use of land is a per se taking
• Avoid per se liability if regulation is
  justified by background principles of law

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Penn Central Transportation Company v. New York
City (1978)
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Penn Central Transp. Co. v. New York City,438
U.S. 104 (1978)

• Multifactor Test
• Character of the government action
• Economic impact
• Reasonable, investment-backed expectations

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Nollan v. California Coastal Commission (1987)
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Nollan v. California Coastal Commission (1987)
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Nollan v. California Coastal Commission, 483
U.S. 825 (1987)

• Compelled dedication must bear a logical nexus
  to the problem or concern posed by the
  proposed development.
• The Nollan dedication failed because enhanced
  beach-side access is not logically related to
  the loss of the view from the highway.

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Dolan v. City of Tigard (1994)Picture 1
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Dolan v. City of Tigard (1994)Picture 2
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Dolan v. City of Tigard, 512 U.S. 374 (1994)

• Dedication requirement must be roughly
  proportional to the harm anticipated from the
  proposed development
• Precise mathematical calculation is not required
• Must make some effort to quantify findings to
  support the dedication
• Kottschade v. City of Rochester, 537 N.W. 2d 301
  (Minn. Ct. App. 1995)

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Under Dolan, local governments must be prepared
to demonstrated that 1. The proposed development
exacerbates or creates the need for a public
service 2. The dedication demanded will benefit
the proposed development or help address the
need and 3. The dedication demanded is roughly
proportional to the harm.
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Top Ten Issues for Local Governments to Win in
Regulatory Takings Cases

• Procedural Issues
• 1. Takings cases against local governments
  generally must be filed in state court.
  Williamson County Regl Planning Commn v.
  Hamilton Bank (U.S. 1985). Issue preclusion
  prevents re-litigation of the same issues in
  federal court.

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Compensation Ripeness

• Carpenter Outdoor Advertising, Co. v. City of
  Fenton, 251 F.3d 686 (8th Cir. 2001)
• Kottschade v. City of Rochester, Civil No.
  01-898 ADM/AJB (D. Minn. Jan. 22, 2002)

Finality Ripeness

• Wheeler v. City of Wayzata, 533 N.W. 2d 405
  (Minn. 1995)
• Hunkins v. city of Minneapolis, 508 N.W. 2d 542
  (Minn. Ctr. App. 1994)

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Top Ten Continued...
Procedural Issues 2. There is no right in state
court to have a jury decide the question of
liability.
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Top Ten Continued...

• Defining the Lucas Box
• 3. A per se taking under Lucas occurs only where
  land is rendered valueless.
• 4. Reasonable planning moratoria and permit
  delays are not Lucas takings.
• Woodbury Place Partners v. City of Woodbury, 492
  N.W. 2d 258 (Minn. Ct. App. 1993)
• Nuisance Abatement Zeman v. City of Minneapolis,
  552 N.W. 2d 548 (Minn. 1996) City of Minneapolis
  v. Fisher, 504 N.W. 2d 520 (Minn. Ct. App. 1993)
• Statutes and regulations may act as background
  principles that defeat takings claims.
• Palazzolo v. Rhode Island
• Outdoor Graphics, Inc. v. City of Burlington, 103
  F.3d 690 (8th Cir. 1996) (billboard ordinance)

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Top Ten Continued...

• Winning Under Penn Central
• 6. Clear rules define the parcel as a whole for
  takings analysis and prevent segmentation into
  affected and non-affected portions.
• The finding of a taking under Penn Central
  requires a very dramatic (greater than 90
  percent) diminution in value.
• Animas Valley Sand Gravel, Inc. v. Board of
  County Comm'rs, 2001 WL 1598634, No. 00SC151
  (Colo. Dec. 17, 2001) (a taking under Penn
  Central occurs only where regulation leaves a
  landowner with "slightly greater than de minimis"
  value)
• 8. There is no generalized means-end theory of
  takings liability. The question of whether a
  land-use law advances a legitimate state interest
  is a due process inquiry.

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Top Ten Continued...

• Properly Limiting the Nollan and Dolan Tests
• 9. The essential nexus/rough proportionality
  test of Dolan/Nollan applies only to
  required dedications, not impact fees and
  other development conditions.
• 10. The essential nexus/rough proportionality
  test of Dolan/Nollan does not apply to
  so-called unsuccessful exactions.
• Goss v. City of Little Rock, 151 F. 3d 861 (8th
  Cir. 1998)

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Religious Land Use and Institutionalized Persons
Act

• Originally passed as the Religious Freedom
  Restoration Act (RFRA) of 1993.
• City of Boerne v. Flores, 521 U.S. 507 (1997)
  struck down RFRA for exceeding Congresss
  enforcement powers under the Fourteenth
  Amendment.
• RLUIPA passed in 2000 to reinstate strict
  scrutiny for government actions that burden
  exercise of religion.

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RLUIPA (cont.)

• General Rule
• No government shall impose or implement a land
  use regulation in a manner that imposes a
  substantial burden on the religious exercise of a
  person unless it is in furtherance of a
  compelling governmental interest in the least
  restrictive means possible.
• Rooted in Congresss Spending power and the
  Commerce Clause
• Shifts Burden of Proof to Government

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RLUIPA Case Law

• Constitutionality upheld in Mayweathers v.
  Terhune, 2001 WL 804140 (E.D. Cal. 2001)
• Relaxed exhaustion and ripeness requirements in
  Murphy v. Zoning Commn for the Town of New
  Milford, 148 F. Supp.2d 173 (D. Conn. 2001).
• Fear of arrest was precisely the type of chilling
  effect on religious practices Congress intended
  to trigger RLUIPA. Murphy v. Zoning Commn.

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RLUIPA Case Law (cont.)

• Substantial Burden Further Defined
• Aesthetic harm of 150-ft. pole on golf course
  adjacent to church was not a substantial burden
  on congregations religious exercise. Omnipoint
  Communications v. City of White Plains, 202
  F.R.D. 402 (S.D. N.Y. 2001).
• National Park Services ban on selling t-shirts
  on National Mall in Washington, DC was not
  substantial burden on vocation to spread the
  gospel. Henderson v. Kennedy, 265 F.3d 1072 (D.C.
  Cir. 2001).
• Importance of Religious Practice also a factor.
  Henderson v. Kennedy.

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RLUIPAs Affect on Zoning

• Chicago changed zoning laws to avoid RLUIPA
  liability. C.L.U.B. v. City of Chicago, 157 F.
  Supp.2d 903 (N.D. Ill 2001).
• Churches sued under RLUIPAs discrimination
  provision because clubs and recreation centers
  were uses of right in certain areas where
  churches were not.
• Chicago required special use permits of other
  church-like uses and suit failed.

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Palazzolo Coastal Wetlands
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Palazzolo Coastal Wetlands
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Palazzolo Coastal Wetlands
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Palazzolo Coastal Wetlands
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Palazzolo v. Rhode Island (U.S.)

• Takings challenge to the denial of a permit to
  fill 18 acres of pristine coastal wetlands
• Palazzolo seeks 3,150,000 based on profits
  expected from building 74 single-family
  homes
• Rhode Island Supreme Court deemed the case
  unripe because
• (1) Palazzolo failed to apply for a permit to
  build the 74 homes and
• (2) Palazzolo failed to seek permission to
  fill less than 11 acres or to build on
  the upland portion of the property.

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Palazzolo v. Rhode Island121 S. Ct. 2448 (June
28, 2001)

• 5-4 win for landowner
• Movement case handled by Pacific Legal
  Foundation in the Supreme Court
• Mush raises more questions than it answers

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Palazzolo Six Opinions
Justice Kennedy (Majority) -- joined by Chief
Justice
Rehnquist and Justices
OConnor, Scalia, and

Thomas Justice OConnor (Concurrence) Justice
Scalia (Concurrence) Justice Stevens
(Dissent) Justice Ginsberg (Dissent) Justice
Breyer (Dissent)

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Four Factual Wrinkles in Palazzolo

• 1. The Nature of the Takings Claim
  Subdivision vs. Beach Club Proposal?
• 2. The Number of Houses that May be Built One
  or Several?
• 3. Palazzolos Acquisition Date 1978 or 1959?
• 4. The Trial Courts Nuisance Finding

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Summary of Palazzolo Rulings

• Case is ripe
• Claim is not barred simply because Palazzolo
  acquired the land after the rules were issued
• No per se take under Lucas because the
  landretained significant value

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The Palazzolo Ripeness Ruling

• Reaffirms basic ripeness rule court must know
  the extent of permitted development
• A landowner may not establish a taking
  before a land-use authority has the opportunity,
  using its own reasonable procedures, to decide
  and explain the reach of a challenged
  regulation.
• State law may impose additional ripeness rules
  -- beyond federal ripeness rules -- to control
  damage awards based on hypothetical uses.

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The Palazzolo Notice Rule Ruling

• Post-enactment acquisition is not an absolute bar
  to a takings challenge to a statute
  or regulation
• Fairness concerns
• Background principles include statutes and
  rules derived from a States legal tradition

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Palazzolo Expectations Analysis

• Pre-existing statutes and rules are still
  relevant to the Penn Central test
• OConnor concurrence plus four dissenters
• No other Justice joined Scalias view to the
  contrary

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Palazzolo The Lucas Per Se Rule Issue

• 200,000 in value (6.4 of claimed value)
  defeats a Lucas per se claim a 93.6 value
  loss is not enough to trigger the Lucas per se
  rule
• Token interest does not defeat a Lucas claim
• Palazzolo describes Lucas test both in terms of
  use and value

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Palazzolo Concluding Observations
1. Both sides claim victory 2. The Court may have
muddled the parcel-as-a -whole rule 3. No
discussion of the value of wetlands 4. More
charged rhetoric from Justice Scalia 5. More
rhetorical flourish from the Court in favor of
takings claimants
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Lake Tahoe Picture 1
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Lake Tahoe Picture 2
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Lake Tahoe Picture 3
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Tahoe-Sierra Preservation Council, Inc. v.
Tahoe Regional Planning Agency, 216 F.3d 764
(9th Cir. 2000), cert. granted, 121 S. Ct. 2589
(June 29, 2001)
Whether the Court of Appeals properly determined
that a temporary moratorium on land development
does not constitute a taking of property
requiring compensation under the Takings Clause
of the United States Constitution?
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Tahoe Facts

• Lake losing one foot of clarity every year due
  to uncontrolled development
• 32-month planning moratorium to allow for
  preparation of a regional growth plan
• 450 landowners brought facial takings claim

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Tahoe Trial Court

• Moratorium reasonable in scope and duration
• No interference with reasonable expectations
  (average holding period in the Tahoe Basin 25
  years)
• No Penn Central Taking
• Per se taking under Lucas

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Tahoe Ninth Circuit

• No Lucas Taking
• Must consider all uses, including future uses
• Cannot temporally sever the landowners
  property interests (parcel-as-a-whole rule)
• Agins v. City of Tiburon, 447 U.S. 255 (1980) --
  mere fluctuations in value during the
  process of government decisionmaking, absent
  extraordinary delay . . . cannot be considered
  a taking . . .

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Tahoe In the Supreme Court

• Key issue meaning of the Courts 1987 ruling
  in First English
• The only issue concerns the Lucas ruling
• The trial court found that none of the land is
  valueless
• It is now undisputed that the moratorium was
  reasonable in scope and duration
• Restrictions under the regional plan are not
  before the court

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TAHOE ORAL ARGUMENTWoodbury Place Partners v.
City of Woodbury,492 N.W.2d 258 (Minn. Ct. App.
1992)
J. SCALIA My impression is that most of these
moratoriums, or moratoria, whatever theyre
called would not be total.. MR. BERGER Thats
correct, Justice Scalia and I think thats the
more typical kind of moratorium, and the kind
that most of the amici on the agencys side have
been talking about. C. J. REHNQUIST There was
one Minnesota moratorium that was seemed
somewhat like this that had been sustained by, I
think the appellate court. MR. BERGER There was
one, Your Honor, and I would submit that that
court erred. It happens. Lower courts do that
sometimes. (Laughter.) C. J. REHNQUIST So we
notice. (Laughter.) MR. BERGER And we believe
that that simply is not an appropriate precedent
for this court to follow.
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MCQUEEN V. SOUTH CAROLINA COASTAL COUNCIL

• McQueen bought two oceanfront lots in the 1960s
• In 1977, South Carolina adopted rules that
  restrict the filling of coastal wetlands
• McQueen took no action for 30 years after his
  purchase the lots reverted to their natural
  condition
• In 1991, the State denied McQueen permission to
  fill and develop the lots
• It is undisputed that the permit denial
  extinguished all economically viable use of
  the land
• Issue Did McQueens inaction for thirty years
  reflect the lack of a reasonable expectation
  to develop that defeats his takings claim?

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